Why the Rich Pay Less for Insurance

Little known fact… The wealthy often pay less for insurance than the average person, and they actually get better coverage. However, you don’t have to be wealthy to pay less for insurance. Here is why the rich pay less for insurance:

The rich do not buy insurance based off commercials

No Geckos were injured in the making of this website

You cannot turn on the TV or radio without seeing or hearing an ad from an insurance company. Large insurance companies spend BILLIONS to convincing the masses that their products are cheaper and better than the next company’s products, when they often are not. Many of the companies with the best policies and highest financial ratings act. They may not even be names you have heard of before.

In 2011…Allstate spent $745.3 Million, State Farm spent $813.5 Million, and Geico alone spend just under a Billion dollars ($993.8 Million) to convince the masses to buy their products. The affluent are not fazed by commercials. They see insurance as a financial product used to protect their wealth, so they buy products based on coverage and financial strength of the carrier, not lovable characters or funny advertising.

The Wealthy do not shop for insurance themselves

Insurance shopping can be rough without an Agent

The wealthy do not call 800 numbers or go online to workup insurance quotes themselves. Companies that encourage you to do everything online, or to choose your coverages yourself, leave you vulnerable to buying inadequate or excessive coverage, or the wrong thing all together. Those who have grown their wealth often do it by relying on the professional around them.

Those most proactive in protecting their wealth do not generally do their taxes themselves or go to a mall kiosk, they use professional CPA firms. Similarly these folks work with a licensed Independent Insurance Agents to help them manage their insurance needs. These Independent agents have access to more carriers, products and coverage options than agents bound to one carrier. An Independent agent can often provide the customers with better products at a lower premium than customers can find on their own. The rich know they have too much to lose by not properly managing their risk, so they have a professional do it for them. Thus, they tend to pay less, have better coverage, and have a professional managing their policies. The sweetest part is… you don’t have to be rich have an independent agent work for you.

The Well-to-do have better credit

Over the last 10 to 15 years insurance companies have shifted their underwriting to rely more on consumers’ credit reports. Interestingly, it has little to do with them being worried that you will be able to pay your premiums. It is actually because statistics used by insurance companies show that people with better credit are less likely to turn in claims.

There are two major reasons for this. People with excellent credit tend to be more responsible in general and less likely to file small frequent claims. Statistics show that there is a correlation between people with good credit, how responsible they are as drivers, and how well they maintain their vehicles and homes. Well maintained homes tend to generate fewer claims. Newer and better maintained vehicles are safer.

Insurance companies believe people should cover most small incidents themselves on home and auto products, and that insurance should be used in more catastrophic events. It is part of the reason why there are deductibles on most insurance policies. People that are financially strapped are much more likely to turn in small frequent claims then people with money, who are willing to pay for the repairs themselves. This brings us to the next point…

The Rich don’t turn in small claims.

You should think twice about turning in frequent minor claims

Turning in small frequent claims can have a serious impact on premiums. Insurance companies often put more weight into how often you file claims than how much the claims are that you file. Someone that is struggling financially is much more likely to turn in a claim every time there is minor storm damage to their home or minor damage to their car, than those with the funds to make the repairs themselves.

They have higher deductibles:

Because the affluent are less likely to turn in minor claims, they are willing to accept higher deductibles, which reduces the monthly premiums they pay. Just one more way to keep extra money in their pockets.

The rich get a discount for have better coverage

Did you know that most preferred auto insurance companies give you lower rates for carrying previous insurance with higher liability limits? If someone with state minimum coverage calls a preferred insurance carrier for an auto quote, they will often be quoted a higher premium than those who previously carried higher liability limits. Insurance companies know that people who are worried about having enough coverage are also worried about avoiding risky activities that can cause claims. Thus, they get a discount for having higher prior insurance deductibles.

For more money saving tips or a free policy review and insurance quote, call us at (888) 539-7520 or feel free to email or fax us your current policies for a comprehensive review and comparison. Fax: (636-352-2878) Email: info@practicalins.com. We currently service the states of Missouri, Illinois, Florida.

Be sure to ask your agent what discounts may apply to you!

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